Good day, and thank you for standing by. Welcome to the Ignitis Group Full Year 2024 Earnings Conference Call and Webcast. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one and one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one and one again. Alternatively, if you wish to ask a question via the webcast, please type it into the box and click submit. Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your speakers today. Speakers, you may begin.
Good afternoon, everyone, and welcome to Ignitis Group full year 2024 earnings call. Thank you for joining us today. I'm Ainė Riffel-Grinkevičienė, Head of Investor Relations, and I will be moderating today's presentation. Our CEO and CFO will present the strategic and financial performance for 2024, followed by a question-and-answer session. Before we begin, please note that today's presentation contains forward-looking statements subject to risks and uncertainties. These statements reflect management's current beliefs, expectations, and assumptions, and actual results may differ materially. With that, I would like to hand over to Darius to start with the strategic highlights.
Good afternoon, all. Welcome to our full year 2024 results call. In 2024, we once again delivered strong underlying results. Our Adjusted EBITDA reached a record high of EUR 527.9 million, representing an 8.9% year-over-year increase and exceeding the top of the guidance range communicated to the market. Second, we have continued strategy delivery. Our green capacities portfolio increased by 0.8 GW , reaching 8 GW. Despite implementing a heavy investment program, we maintained our balance sheet strength with a net debt-to-Adjusted EBITDA ratio of 3.05x . And in turn, we continue our dividend commitment for 2024. We intend to pay EUR 1.33 per share, representing a 3.1% increase over the previous year. Now, let me take you through the development of each business segment over 2024. First, the progress of our largest business segment, green capacities. As already mentioned, our total portfolio increased to 8 GW in 2024.
This growth is attributed to greenfield capacity additions of around 0.5 GW and green connection capacity secured for our first BESS projects with a capacity of 290 MW in Lithuania. Next, we expanded our secured capacity by around 200 MW, reaching a total of 3.1 GW. This includes Tume Solar Farm in Latvia, which has now reached the construction phase. Also, as we completed three projects, our installed capacity increased by around 100 MW to 1.4 GW, as Silesia 1 Wind Farm in Poland, Vilnius CHP Biomass Unit, and Tauragė Solar Farm, both in Lithuania, have reached commercial operation date. Regarding the composition of our portfolio, it remains dominated by wind projects with a share of 5 GW. Most of the projects are being developed in Lithuania, accounting for 4.5 GW, and flexibility part remains a sizable part of our portfolio with a capacity of 1.4 GW.
Next, an update on our project execution. Since the earnings call of our nine-month results, we have successfully completed the construction works at our 137 MW Silesia 2 Wind Farm in Poland, both on time and within the budget, with all turbines erected, installed, and operational. As planned, the project supplied first power to the grid, reached partial operation with an operational cap of 70 MW in Q4 2024, and has been generating revenue since then, limiting the financial impact. However, due to delays in reinforcing the grid, which are beyond our control, we now expect the wind farm to reach full operational and capacity COD in H2 2025. Previously, it was expected to have in the first quarter 2025. Next, at our 300 MW Kelmė Wind Farm under construction in Lithuania, which is also the largest wind farm in Baltics, we have supplied first power to the grid.
By now, all 44 turbines have been successfully erected. Finally, let me provide an update on offshore wind development. First, regarding Lithuania's second 700 MW offshore wind project CfD tender. In October 2024, we took decisions to participate in Lithuania's second 700 MW offshore wind tender and seek partners. In January 2025, the tender has been temporarily suspended, with the tender expected to be relaunched in due course and the winner awarded in the second half of 2025. We will make the decision whether to participate in the relaunched tender when we will know the conditions of it. Second, on the 700 MW Curonian Nord project in Lithuania. The project has been developing according to the plan until now. We expect to make a final investment decision after completion of the development and obtaining a construction permit in 2027.
However, as a result of large-scale electrolysis projects being delayed across Europe, including Baltics, possibilities to secure long-term power offtake have reduced. Combined with challenges in the current offshore wind supply chain environment, financing of that project may become challenging as we approach FID in 2027. As a result, there might be a need to delay the project COD until there is more visibility on the electrolysis demand and/or the interconnector with Germany. We will continue to monitor the market developments and will update our plans accordingly, and lastly, on the 1 GW Liivi project in Estonia, we are exploring opportunities to participate in a potential CfD tender. Let me now move to our second-largest business segment, networks. There are three major updates. To begin, the regulator has approved our EUR 3.5 billion 10-year investment plan for distribution networks, extending up to 2033.
This marks a 40% increase in investments compared to the previous submitted plan. Next, the regulator has also set the 2025 tariffs, including the regulated asset base at EUR 1.8 billion, the weighted average cost of capital at 5.79%, and the additional tariff component at EUR 37.5 million. Finally, we are successfully continuing the rollout of smart meters. The total number of installed smart meters has exceeded 1 million, and we remain on track to complete the mass rollout by 2026.
With that, let me now turn to our customers and solutions business segment. Over 2024, we focused on building a leading fast-charging EV network in Baltics, successfully tripling the number of installed charging points to a total of 1,091 units. Also, after the reporting period, the European Climate Infrastructure and Environment Executive Agency announced the funding results of the first cut-off date for the Alternative Fuels Infrastructure Facility call for proposals.
Over EUR 297 million will be allocated to major charge point operations across Europe. We are among the top six players for potential funding with the receipt of EUR 16 million. Now, let me cover the last business segment, reserve capacities. The key highlight of the segment is our successful contribution to regional energy security by participating in the synchronization of the Baltic electricity grid with Continental Europe on 9th February. With our progress on business segments in 2024 covered, I would like now to highlight the progress we made in driving our decarbonization initiatives. In 2024, we increased our net green electricity generated by 30.9% year-over-year to 2.3 TWh, driven by new green capacities assets such as Mažeikiai and the first Silesia wind farms, as well as Vilnius CHP Biomass Unit.
On the other hand, our green share of generation decreased by 3.5 percentage points to 81.5% due to the proportionally higher electricity generation of our reserve capacities assets, Elektrėnai Complex. Looking into our greenhouse gas emissions, our total greenhouse gas emissions based on the updated accounting methodology amounted to 4.05 million tons of CO2 equivalent, marking a 7.2% decrease year-over-year. Notably, we achieved a significant 35.6% reduction in Scope 2 emissions and an 8.3% decrease in Scope 3 emissions. However, our Scope 1 emissions rose by 14.8% due to increased energy production. Next, on the safety. In 2024, no fatal incidents were recorded. Employee and contractor total recordable injury rates stood at 1.12 and 0.84, respectively, both below the targeted level. That concludes the strategic performance review. I will now pass it over to Jonas for a financial update.
Thank you, Darius. Let me start with the 2024 guidance achievement update. We have again delivered strong results. Our Adjusted EBITDA in 2024 reached EUR 527.9 million and exceeded the top range of our guidance. To remind you, our latest guidance was between EUR 480 million and EUR 500 million, and we published it in November last year. Guidance output performance was driven by two segments: green capacities and reserve capacities. In the green capacities segment, we saw higher-than-expected volumes generated in our onshore wind farms. And in the reserve capacities segment, we managed to capture higher-than-expected electricity prices. Regarding 2024 investments, they amounted to EUR 812 million and were in line with our guidance. Investments remained at a historically high level, as we invested 42% more than the average investments of the last five years. Now, let's turn to the further financial highlights of the year.
Adjusted EBITDA grew by 8.9% year-over-year and reached EUR 527.9 million, driven by better results in green capacities and network segments. Adjusted net profit decreased by 3.2% to EUR 277.5 million, mainly due to higher interest expenses. Investments remained at historically high levels, while return on capital employed decreased by 0.8 percentage points to 9%, driven by the lag between the deployment of capital and investments and the subsequent realization of returns. Our leverage metrics remained strong, with FFO to net debt at 29.7% and net debt- to- adjusted EBITDA at 3.1 times. Additionally, S&P has reaffirmed the group's BBB+ credit rating with a stable outlook, which is in line with our commitment to maintain a solid investment-grade credit rating of BBB or above over a four-year strategic period.
Finally, following our dividend commitment for 2024, we intend to distribute a dividend of EUR 1.33 per share, which is 3% higher than last year and indicates a dividend yield of above 6%. Let us now take a deeper dive into each of our main KPIs, starting with adjusted EBITDA. Firstly, green capacities EBITDA grew by 17.9% to EUR 262.4 million as a result of new asset launches and higher captured electricity prices due to the flexibility of our assets.
Secondly, network EBITDA grew as well by 22.2% and reached EUR 219.9 million, mainly due to higher RAB as a result of continued investments into our electricity network and higher regulatory WACC, which reflects a higher interest rate environment. Thirdly, reserve capacities generated EUR 32 million of EBITDA, which is lower by EUR 7.9 million compared to the last year, and the decrease is related to extraordinary conditions during Q1 and Q4 of 2023.
Finally, our customers and solutions segment, its EBITDA was lower by EUR 23.3 million and fell to EUR 7.1 million. The decrease was driven by lower B2B natural gas supply results, which was partly offset by lower losses from B2C electricity supply activities and better B2B electricity results in Poland. Next, let's take a closer look at the EBITDA performance of each segment. Starting from green capacities, it remains the largest contributor to the group's adjusted EBITDA, contributing for almost 50% of the total. The main drivers behind 17.9% growth year-over-year were these: firstly, the launch of new assets. We have launched three new assets in 2024: Silesia 1 Wind Farm, Tauragė Solar Farm, and Vilnius CHP Biomass Unit. On top of that, Kelmė Wind Farm and Silesia 2 Wind Farm supplied first power to the grid.
The second main reason for growth was higher captured electricity prices, mainly due to the flexibility of our assets. Next, let's move to the network segment. The key drivers behind the growth in networks Adjusted EBITDA were a higher regulated asset base, which grew by 10.8% from EUR 1.4 billion to EUR 1.6 billion due to continued investments in the electricity network, and an increase in WACC set by regulator, rising from 4.1% in 2023 to 5.1% in 2024, driven by a higher interest rate environment. It's important to note that the tariffs for 2025 are already set and include a 13.3% increase in RAB, reaching EUR 1.8 billion, and a WACC increase to 5.8%. Next, the reserve capacity segment. We achieved strong performance in both 2024 and 2023. However, the results fell by 15.8%, totaling EUR 42 million.
This decline was due to lower market premium earned, which is related to extraordinary market conditions in Q1 and Q4 of 2023. Lastly, customers and solutions Adjusted EBITDA was lower by EUR 23.3 million year-over-year and amounted to EUR 7.1 million. The decrease was driven by lower B2B natural gas supply results, mainly due to inventory write-down reversal in 2023. However, it was partly offset by lower loss from B2C electricity supply activities and better B2B electricity supply results in Poland. Next, let's take a look at our investments. Our investments amounted to EUR 812 million, maintaining historically high levels, which are 42% higher than the average over the last five years, even despite a year-over-year decrease of 13.3%. 53.5% of our investments were made in the green capacity segment and 41.5% in the network segment. Green capacities investments reached EUR 434.5 million, reflecting a 19.9% decrease.
This decline is mainly due to the successful completion of several major projects: Silesia 1 and Silesia 2 wind farms and Vilnius CHP Biomass Unit. In 2024, the major part of investments were dedicated to Kelmė wind farm in Lithuania and solar farms in Latvia. In the network segment, we invested EUR 337 million, primarily focused on the expansion and maintenance of the electricity network. Year-on-year investments declined by 2.8%, mainly due to smart meter installation projects approaching completion.
Moving on to our net working capital numbers, it has decreased by 41.4% since December of 2023 and by 11.7% since September 2024, and reached EUR 102.6 million by the end of the year. The main drivers behind the lower net working capital were higher trade receivables, mainly due to the increased balance of trade financing facilities used for purchasing natural gas, and lower inventories due to the lower volume of natural gas stored.
However, it was partly offset by higher trade receivables. Adding it all together, our free cash flow metric amounted to EUR 193.9 million, mainly as a result of investments exceeding EBITDA. Regarding the leverage metrics, our net debt increased by 22.4% year-over-year and reached €1.6 billion at the end of 2024. Our main credit metric, FFO to net debt, improved to 29.7%, significantly above the 23% threshold required by S&P for a BBB+ credit rating. Net debt- to- adjusted EBITDA increased from 2.7x to 3.1x . And finally, our guidance for this year. We expect our 2025 adjusted EBITDA to be in the range of EUR 500 million-EUR 540 million. We anticipate growth in three of our four segments: green capacities, networks, and reserve capacities. In the green capacities segment, growth is expected to be driven by new projects, with more than 700 MW reaching COD in 2025.
These projects include Kelmė Wind Farm, Silesia 2 Wind Farm, Stelpe Solar Farm, Vārma Solar Farm, and the Polish solar portfolio. In the network segment, we anticipate an increase in results due to higher RAB, driven by continued investments, and approved higher WACC, reflecting higher market interest rates. In the reserve capacity segment, we expect higher results due to anticipated increases in electricity generation volumes from new services provided. Finally, we expect lower results in the customers and solutions segment, driven by further negative results in B2C electricity supply, including adverse consumer effects under the current net metering scheme. In terms of investment guidance for 2025, we expect investments to be in the range of EUR 700 million-EUR 900 million.
In the green capacity segment, the main investments will be made in Kelmė Wind Farm and Kruonis Pumped Storage Expansion projects in Lithuania, as well as Vārma Solar Farm and Tume Solar Farm in Latvia. In the network segment, investments will be focused on the electricity network, both maintenance and expansion. With that, I will hand over to Darius to conclude our presentation.
Thank you, Jonas. Let me summarize Ignitis Group's performance for the full year of 2024. In 2024, we once again delivered strong underlying results. Our Adjusted EBITDA reached a record high of EUR 527.9 million, representing an 8.9% year-over-year increase and exceeding the top of our guidance range communicated to the market. Second, we have continued strategy delivery. Our green capacities portfolio increased by 0.8 GW, reaching 8 GW.
Despite implementing a heavy investment program, we maintained our balance sheet strength with a net debt- to- Adjusted EBITDA ratio of 3.05x . And in turn, via continuing dividend commitment for 2024, we intend to pay EUR 1.3 per share, representing a 3.1% increase over the previous year. And for 2025, we expect Adjusted EBITDA of EUR 500 million-EUR 540 million and investments of EUR 700 million-EUR 900 million. With that, I would like to thank you for your time and attention today.
Thank you to our speakers. We will now open the floor for questions. The first question is: Can you unlock more about customers and solutions significantly versus results? Should this continue in 2025?
Yes. So year-on-year decline in customers and solutions is driven by multiple factors. Firstly, natural gas results have normalized from above usual levels, which we earned over the last few years.
Secondly, B2C electricity remained loss-making, in part due to consumers' negative effect under the current net metering scheme. In terms of 2025, as provided in the guidance, we expect customers and solutions' EBITDA to be lower than in 2024. That is, again, mainly due to consumers' impact and higher price purchase contracts, which will expire in 2025.
Next question: Do you see Baltic states' synchronization project as a positive or negative indicator for Ignitis' future financial result?
From our perspective, and in general from the market's perspective, synchronization brings additional auxiliary services to the market, which means that it is a positive development for flexibility investments such as batteries.
Following question: Silesia 1 of a 50 MW capacity project produced only 30 GWh in Q4, while Pomerania with 94 MW capacity produced 95 GWh. Is Silesia 1 producing at full scale?
Why is there such a difference in production from 1 MW installed?
Yep. So Pomerania and Silesia, these two projects have different capacity factors. So Pomerania has a substantially higher capacity factor due to its geographic location. Silesia, which is more in the southern part of Poland, has a lower capacity factor. So that is one effect. And the second reason is that Silesia 1 is still in the third year of operations, and naturally, the availability factor is slightly lower than of the wind farms, which operate for multiple years. So these two factors, capacity factors and availability due to the third year of operations, explain the difference.
One more question: Kelmė 1 and Kelmė 2 projects are already 100% built. Are all turbines already producing?
So not yet. Not all the turbines are producing at the same time.
It is still a testing period in both Kelmė I and Kelmė II wind farms. COD hasn't been reached for neither of them. It is a testing period. It is not yet a full generation period for these two wind farms.
Let us address the following question: Can you specify the challenges and financial difficulties which may delay the Curonian Nord project COD? Is it only delays in electrolysis projects or also difficulties in obtaining bank loans?
I can just confirm that it is both. It is both the delay in electrolysis projects and the interrelated outcome of that is difficulties on the financing side.
The following question: When should we expect the first electricity produced in Latvia solar parks?
In terms of solar parks in Latvia, our Stelpe and Vārma projects are expected to be completed this year, so to reach COD this year.
Depending on the amount of sun which we will have towards the end of the year, we will see how much we generate this year. The majority of solar generation will come already in 2026 and not 2025.
Following question: Do you anticipate to get state support subsidy for BESS project, or will you run it on market terms?
We will be looking into the Lithuanian tenders which have been announced for BESS. And we are also exploring BESS support schemes in other markets as well.
The next question: What are some of the key risks you see this year that could possibly delay your Adjusted EBITDA guidance, and in which business division are these risks present?
Yeah. In terms of EBITDA guidance, the main sensitivity factors which we have are the same as usual.
So these are captured power prices and generation volumes across our green capacities and reserve capacity segments. So these two are the main ones. We think we are controlling them quite well with high hedging levels and proper maintenance in place for our operational projects. So I mean, yes, these are the two risks which could derail the guidance, but we are quite confident in the guidance range which we have provided.
Next question: What are the key features you will increase to increase the overall performance?
So in terms of our overall performance, the key things for us are in our two main segments. So it's on the network side and on the green capacity side. So on the network side, we will continue with our investment program as planned.
On the green capacity side as well, the main drivers will be the new asset launches which we will have this year. In the base case scenario, we foresee 700 MW of new projects reaching COD this year. Those two segments will be the key drivers for our results this year.
Here is another question: In your strategic plan, investment into green capacities were planned in the range of EUR 1.8 billion-EUR 2.4 billion in 2024-2027. Do you plan lower figures now bearing in mind delayed electrolysis projects in Europe?
The short answer is no. We still are confident in the range we have provided. The projects which we have already in our pipeline should fall within the range which is communicated in the latest strategic plan.
Next question: When you plan to sell Moray West offshore wind investment?
Yes.
Moray West minority stake is a non-core asset for us. The most likely scenario is that when the majority shareholder of that project would decide to sell part of its stake or full stake, we would join them in that process.
We have one more question: Could you comment on wind discount in Q4 2024 compared to Q3 2024, and what have you forecasted for this year?
In terms of wind discounts, the capture rate discounts for wind, it depends quite a bit on each individual wind farm and its location. What we see in our geographies, the range which we saw last year was between 10% and 20% of the capture rate discount. We expect similar levels for the next year. That is what we included in our guidance numbers.
As we have no further questions, this concludes our full year 2024 earnings call. For follow-up questions, please contact our investor relations team. Thank you for joining us today, and we look forward to our next earnings call.
Thank you. This concludes today's conference call. Thank you for participating, and you may now disconnect.